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moneysense.ca, 26/09/08
This and That # 111: Bailout edition
- A lot of media coverage talked about how Warren Buffett is expressing confidence by investing $5 billion in Goldman Sachs. That maybe so, but Mark McQueen, who writes the Wellington Financial blog points out that Buffett got a deal that is not available to any other investor.
- Fortune magazine on why all these references to the Great Depression are a bit overblown.
- Moshe Milevsky talks to Money magazine about his work on personal finance and risk management.
- With winter just around the corner, Money magazine offers six timely tips on reducing your energy bills.
- Jon Chevreau posted his notes from a conference call with financial advisor and author Larry Swedroe.
- Does a Costco membership really save you money?
- Larry MacDonald on what you should be doing to deal with the financial crisis.
- Gail Vaz-Oxlade tackled the question of whether to cancel credit cards.
- Ellen Roseman writes about how she is dealing with the bear market.
- Million Dollar Journey takes a look at the Green Shift platform of the Liberal Party.
moneysense.ca, 26/09/08
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You probably already know what I think about Costco. No, buying a Costco membership does not save you money. At least they are no better at saving you money than credit card points and rewards programs are at making you money.
Love the link to the Milevshky interview and his quote: “Yesterday the market is up: People are risk tolerant. Today the market plummets: They’re no longer risk tolerant.”
Not that I know anything, but maybe Buffet missed another opportunity because he could have just bought Washington Mutual for less then half as much as he put into Goldman.
Thanks for the mention CC. I’m a bit behind this morning but I will be getting my link post up shortly.
Ellen Roseman link is empty
One thing not mentioned about Costco is their pharmacy dispensing fees are very low, I think less than $5 vs. $12 at Shopper Drug Mart. If you have kids (like we do) then you’ll be buying medicine and lots of it…. that adds up.
“Knock $4000 off your utility bill”
Wow! Some people must have utility bills in the tens of thousands of dollars. Most of their suggestions “save” about 10 – 15% if implemented thus to save $4,000 you’d need a $30,000 to $40,000 utility bill.
I would however love to save $4,000 on my $1,500 annual utility bills!
CNN: News generation at it’s worst.
DAvid
Dave: Yes, shoppers should be careful at Costco. I usually don’t buy any foodstuff at Costco but restrict myself to things like cooking oil, olive oil, paper towels, diapers, OTC medicines etc. Still, it’s not uncommon to walk into Costco for milk and walk out with a flat-screen TV!
CI: Isn’t that so true? And to think that they still use questionnaire’s to figure out someone’s risk tolerance.
Jordan: He probably looked at WaMu. There was an article in the Wall Street Journal that Buffett kicked the tires at Bear Stearns, Lehman Brothers and AIG but said “no, thanks!”.
Alex: Thanks for letting me know. I’ve fixed the link.
Novice: I didn’t know that. We have prescription coverage, so we just get them at Shoppers. A $7 difference will add up pretty quick. Last winter, the kids seemed to be constantly sick and I noticed a huge price difference between Costco and Shoppers on things like Tylenol, Advil etc.
DAvid: That’s funny. I didn’t pay much attention to the headline. I’d like to save $4,000 on our $1,500 utility bills as well!
I would like to ask a question which is not quite related to the topic. As everyone is aware of recent market turmoil, and I am wondering what is the best way to do with my 100k loan investment. I was naive and did not really know much about the mutual fund. I was persuaded into borrowing 100k with 6% of interest to invest in mutual fund two years ago when the TSX is at recent peak. The market value of 100k is down by 20%. As far as I am concerned, I think I should wait and pull out when TSX is at least like around 14000 points. Because pulling out at the worst time doesn’t seem like a good idea. It might take a few months or maybe a year or two for market to recover. I am reluctant to pay interest every month but it’s not a big burden at least for now. I would appreciate any advice from you guys.
Maybe more details about my background will help to assess the situation. I am in my late 20s and have no morgage or other bill to pay except for the rent and currently working at a gold mining company.
Thanks very much.
To Canadian Capitalist, your blog is very informative and I really like to come here to check new post. But if you think my question is inappropriate to your blog, it’s okay to just delete my comment, I will understand.
Hey gold… I’m sure you already did the first step… kick whoever convinced you to do that in the nuts
But the other thing you need to do is figure out what penalties and costs you might incur if you wanted to get out of the mutual fund and move to something else. While it’s true that your mutual fund is down 20%, so I wouldn’t cash out if I were in your shoes, there are other things that are down as well that might be better to rebound in, especially considering your mutual fund is still collecting it’s fees while it loses your money.
If you need the money to pay the loan, you could move it into something that generates income for you, for example, or if you have room in your RRSP’s, shift it in there over the next few years to save a bunch of taxes to offset some of the losses.
Of course, that’s all assuming you won’t lose another big whack for early redemption of the mutual fund.
Gold Prospector: I’ll second Steve’s comments. It all depends on your risk tolerance. Would you be willing to withstand another 20% or 25% drop in prices (I don’t know that stocks will or will not fall from here, only that anything is possible) while still paying interest on your loan and have faith that stock prices will eventually recover? You’ll also have to look at whether you are “locked-in” and if there are penalties for early redemption.
If your were convinced to do leveraged investing through an advisor, I would start looking for a new one who can advise you better on how to handle your current investing situation.
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